The Basics of Mortgage - Part 1

10:03 AM Posted by Jason

Generally home buyers always been confused over many issues such as which mortgage to choose, adjustable rate or floating and for how many years? Even how much mortgage can I afford? I am trying to solve some of these problems through this series of posts.

Purchasing a house is the biggest financial investment that we make in our whole lifetime. Before doing any large project, there are many intriguing issues that can haunt us and make our decision complex. Similarly buying a home is also full of complex tasks and we cannot escape them. The cleverest approach is to break the process into some smaller tasks. Such three steps are

1. Check all your records and data.
2. Taking decision about your affordability.
3. Looking for mortgage options available.

Before searching for a home, you should decide on how much loan you can afford. Some mortgage lender can prequalify the borrower up to an amount determined by them. If you be prequalified then you can search a home with a realistic budget in your mind. But being prequalified you have to submit the loan application and this process can take sometime.

You should also check your credit report. First contact your local lender and find out which credit bureau they are using. After that get in touch with the credit bureau and apply for your credit report. You can get free individual credit report in most of the states. Then check whether all the details are ok or not. Don’t worry much if you find the past credit problems in the report. Present a justified reason for the inability to pay in past and also show how your ability to pay have been improved and you can pay on time.